Collapse In New Housing Construction Causes NYSE Jitters

Today, the face of the New York Stock Exchange (NYSE) has changed. Though this might be a temporary change, but one can see the close relation of the sub-prime tension and worry to the NYSE, which hit a low of 9087.75 this Friday. Foreclosures and sub-prime data play a vital role in and give instant reactions in the U.S. stock markets.

The current foreclosure crisis has caused a major downfall in the real estate sector. Slow construction movements along with the sluggish pace of regional factories are some of the major implications of foreclosure. And its direct effect is seen in construction of new homes.

A report on regional factories by Philadelphia Federal Reserve Bank, gives an idea about the recent depression on Wall Street. The downfall in construction activities was at its highest in July 2007 in the U.S., and the slow pace in factory works was seen higher in the Mid-Atlantic region in August 2007.

In July, housing activity slowed to its worst by falling 6.09 percent. Permits to build houses, and future construction signs have also gone under the surface. In July, the fall in building permits was 2.79 percent, the lowest since October ’96. In the south, the condition was worse as construction in new housing dropped by 10.9 percent. But in the Midwest, housing starts showed some improvements. West and North-east also showed decline in housing starts. Earlier this July, house starts were down by 21 percent and new permits by 22.5 percent.

In August the business activities were worst than expected. The Index showed 0.0 whereas the expected figure was 9.0. In July, the situation was slightly better as the Index was at 9.2. Dow Jones saw a decline in its average by 2.66 percent before the day ended when this news came out.

The Labor Department data assured a steady job market in spite of the rise in the number of U.S. workers signing up for jobless benefits. Last week the number was 322100. Economist were, before the weekly report (August 11 report), actually expecting declines in the claims for jobless benefits to 312999 from the previous week i.e. 315999.

A variation in weekly data is ordinary. For economists, a weekly increase in the jobless claims is not something to be worried about. But they still believe in scrutinizing this activity closely because the four weeks moving average data can give us a true picture of the economy.

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